Hormel 3Q Net Soars 49% On Refrigerated Foods Strength

   DOW JONES NEWSWIRES 
 

Hormel Foods Corp.'s (HRL) fiscal third-quarter profit soared 49% as earnings in its refrigerated foods segment jumped amid lower costs and its long-struggling Jennie-O Turkey segment continued a turnaround.

Earnings beat analysts' expectations, though sales missed Wall Street views, which the company attributed to turkey-production cuts.

The maker of Spam luncheon meat and Dinty Moore stews reaffirmed last week's boosted fiscal-year earnings forecast.

Chairman and Chief Executive Jeffrey M. Ettinger said he expects "an excellent year," despite challenges including the weak economy, a continued excess supply of commodity turkey meat and difficult export markets.

The meat industry, like many others, is dealing with a demand slump that has led to cuts in production and prices.

For the quarter ended July 26, Hormel posted earnings of $77.2 million, or 57 cents a share, up from $52 million, or 38 cents a share, a year earlier.

Net sales fell 6.2% to $1.57 billion. Volume dropped 4%.

Analysts surveyed by Thomson Reuters were expecting earnings of 52 cents a share on revenue of $1.7 billion.

Gross margin rose to 16.5% from 13.7%.

Jennie-O Turkey profit surged 97%, though sales fell 4.9% and volume fell 2%, helped by lower feed costs due to reduced turkey production.

Earnings in the refrigerated foods segment - by far Hormel's biggest division - zoomed 60% due to strong export demand, though sales declined 4.9%. Volume fell 1%.

Hormel also said last week that earnings have benefited from a better investment performance in its rabbi trust, which had been hard hit by the stock-market turmoil. Assets of the trust, established to fund executive retirement and deferred income plans, are invested in equity and income securities and generally track the markets.

Shares of Hormel closed Wednesday at $37.24 and were inactive premarket. The stock is up 20% so far this year through Wednesday's close.

-By Mike Barris, Dow Jones Newswires; 212-416-2330; [e-mail]